Opinion // 21.03.2017 // Curated by Ed.

Uh oh. Generations of New Zealander learners could face long-term financial peril as the Productivity Commission recommends the introduction of interest on student loans.

In 2015, the Government asked the Productivity Commission to look at new models of tertiary education, and today their report became public. Ed. Collective Executive Director, Luc Shorter said he is concerned that the Commission’s report states, “Government should reform the Student Loan Scheme” and that, “New borrowing should attract interest”.

We know that current students are battling through genuine hardship to try and complete their studies. For the 60% or so who finish, a huge number are leaving burdened with debt as large as their parent’s first mortgage and heading out into the workforce only to be confronted by the housing crisis.

Ed. Collective made a comprehensive submission to the government last year based on surveys of hundreds of students about their decisions and experiences regarding study. Their concerns about mounting debt were high. Among other questions, Ed Collective asked, ‘Would you like the option to study part-time and have more time to work if you could do so without having to study any longer (e.g. you could still complete a degree in 3 years)? From 1371 responses, 74% responded ‘Yes’, 11% responded ‘No’ and the remaining 15% were ‘Not sure.’

It seems that the Commission is under no illusions about the lack of political appetite for such a change and their suggested approach is clever.

The Commission has proposed an alternative which is to adjust loan balances for inflation based on the Consumer Price Index. This amount is small enough that it seems quite palatable, but is it just the thin end of a wedge? This would be a sound tactic to soften everybody up for a reintroduction of market-rate interest and student loan debt will continue to balloon.

Ed. Collective has discussed the report in more detail for learners at www.edcollective.org.nz and will look at the impact of other recommendations in the report over coming weeks. In the meantime, Mr Shorter said he is pleased with some of the findings that have been outlined.

Many of the Commission’s recommendations line up with proposals we made in our submission to the Inquiry. These were informed by discussing things with students and parents and Ed. Collective is committed to ensuring that learners’ needs remain central to this process.